The University of the Cumberlands was justified in not honoring a controversial deal that would have required the school to pay a former president nearly $400,000 in salary and benefits for the rest of his life, a jury ruled Friday.
Jim Taylor, who was president of the Baptist-affiliated college for 35 years, and his wife Dinah were seeking a lump-sum payment of $4.5 million in a federal lawsuit.
The jury ruling means the school doesn’t have to pay.
The university president, Larry Cockrum, said he was pleased that the jury ruled for the school.
“This verdict allows the university to direct all of its resources toward its mission of providing a quality, affordable education to students from all backgrounds,” Cockrum said in a statement.
Cockrum said that while the Taylors shouldn’t have sued, trustees appreciate the contributions they made to the university.
The path to Friday’s ruling started more than a decade ago.
Taylor, now 73, was president of the Baptist-affiliated university in Williamsburg from 1980 to October 2015.
When it announced a 57 percent cut in undergraduate tuition last September, the private, liberal-arts school said it had 1,366 undergraduates and about 9,000 graduate students, mostly in education.
Taylor’s lawsuit said that even as he devoted his life to UC and led significant growth in enrollment, facilities and fundraising, his salary was significantly less than presidents in similar situations.
In 2005, UC’s board of trustees approved a plan for Taylor to be named chancellor when he retired as president, according to the lawsuit.
The deal called for Taylor to continue receiving the same pay he had as president, for the rest of his life, as well as a continued salary for his wife and other benefits that included health insurance for the couple, the use of a university-owned apartment in Williamsburg and a car, according to the complaint.
If Taylor died before his wife, she was to continue receiving his salary and benefits.
The lawsuit said the package was worth at least $395,000 annually.
Trustees approved the deal as a contract in 2012 and then reaffirmed it in 2015, the lawsuit said.
Taylor said he planned to continue helping raise money for the school in his role as chancellor.
However, the retirement package did not require him to do any work at all, according to the university.
A new administration balked at paying and the issue spilled into a divisive public fight.
Taylor claimed the school had denigrated him and reneged on the deal, causing he and his wife considerable distress; the school argued it would be irresponsible to use tuition and donations to pay the Taylors so much, saying the school “does not exist to unfairly benefit a single individual.”
The school cut off salaries for Jim and Dinah Taylor in the summer of 2016, but continued paying for health insurance for him; long-term care insurance for both; and subsidizing a residence for Taylor’ sister-in-law, according to a court document.
The Taylors receive about $175,000 a year from their university retirement account and Social Security, the document said.
Taylor’s lawsuit turned on the issue of whether the retirement deal was a valid contract.
John M. Sosbe, who represented the Taylors with D. Duane Cook, told jurors in his closing argument that trustees approved the retirement package because Taylor had been a prolific fundraiser.
Trustees understood the value of continuing to have the former president keep working for the school, Sosbe said.
Donations to the school dropped from $10 million in Taylor’s last full year as president to $5 million the next year, Sosbe said.
“Ladies and gentlemen, Dr. Taylor’s worth to the board, to the university, can’t be overstated,” Sosbe told jurors.
Written records showed that trustees did in fact approve the deal, but some later said they couldn’t recall that, or didn’t vote for it, because a concern came up long after the vote that they could have a problem with the Internal Revenue Service for approving an improper benefit for the Taylors, Sosbe said.
Sosbe said the deal was not excessive or improper, but that trustees got bad advice that it could be.
“This was a legal contract,” he said.
But the university’s attorney, Barbara B. Edelman, said trustees did not approve the deal and that the longtime board chairman who signed it, who was close to Taylor, didn’t have authority to do so.
Edelman said that after decades as president, living for free in a university-owned mansion and enjoying domestic help and other perks, Taylor believed he was entitled to the lavish retirement deal and “devised a scheme” to get it.
Taylor came up with the terms, got a friend who was a lawyer to type it up — without having it scrutinized by the university’s regular attorneys — and had his friend the board chairman sign it, Edelman said.
The deal was not on the agenda of the meeting where it was allegedly approved, was not passed out for trustees to go over, and wasn’t filed in the university’s records, Edelman said.
“You pay us forever and we don’t have to do anything. What a sweetheart deal,” Edelman said. “Over $350,000 a year to not do anything is ungodly.”
The University of the Cumberlands last year ended decades of affiliation with the Kentucky Baptist Convention in order to get more freedom in choosing board members.
However, Cockrum said at that time that the school “remains committed to fulfilling its mission as a Baptist institution encouraging intellectual and spiritual growth, leadership, and service through educational programs enriched with Christian values.”
Many of the school’s students come from Appalachia.